A buy-sell agreement is sometimes referred to as a buyout agreement. It is a legally binding agreement between business partners or co-founders that considers how a coowner’s share will be dealt with in the event that one or more of the owners can no longer work for the business.
If you need a business lawyer with experience in drafting contracts to assist you with your own buy-sell agreement, LegalVision has a team of experienced lawyers ready to assist. If you need more information, or would like an obligation-free consultation and fixed-fee quote, get in touch on 1300 544 755.
What triggers a buy-sell agreement?
Some events that may trigger the clauses of a buy-sell agreement include death, injury, divorce, or any other occurrence that leads a co-owner to depart from the business.
Why do I need a buy-sell agreement?
A buy-sell agreement stipulates how a departing coowner’s share of the business will be handled, and whether it will be distributed to, or bought out by, the remaining co-owners in the business.
A buy-sell agreement makes sense for most business structures, particularly partnerships and limited liability companies. The agreement can be drafted bespoke or worked into a partnership agreement or shareholders agreement.
While the importance of a buy-sell agreement may vary depending on the size and complexity of the business, even smaller businesses can benefit greatly from the financial certainty that such agreements afford their co-owners.
In practice, it is inevitable that disputes and misunderstandings will arise if a coowner can no longer participate in the running of the business. Without a buy-sell agreement in place, there is a much greater risk that there will be uncertainty leading to disputes between the remaining stakeholders.
Who drafts a buy-sell agreement?
If you need a buy-sell agreement drafted, our business lawyers can assist. A buy-sell agreement is not an expensive document and offers invaluable long-term security to you and your business.